The Oil & Gas Industry Have A Profit Problem With Fracking

The controversial and ecologically destructive natural gas drilling technique has proliferated across the shale basins of Pennsylvania, Ohio and West Virginia. But the rapid expansion of fracking created a gas glut that has driven gas prices to the lowest levels in decades. Fracking can only continue its breakneck pace if the overabundance of low-priced gas can become profitable through new markets (exports) or new products (plastics) to drive up gas demand.

Without the petrochemical and plastics industries to sop up the excess gas supply, it does not make economic sense to maintain the fracking frenzy when gas prices are this low. One key building block for plastics manufacturing is ethane, a natural gas byproduct that is present in certain shale plays. Natural gas is mostly methane, but some reserves contain other hydrocarbons called natural gas liquids (NGLs), which include ethane, a raw material used to manufacture and produce finished petrochemicals such as plastics. The fracked gas from the Utica and Marcellus shale formations under Ohio, Pennsylvania and West Virginia contain high concentrations of these NGLs.Beginning in 2012 chemical companies started aggressively investing in petrochemical plants and export facilities focused on tapping the ethane glut.

Instead Of Abandoning A Failing, Toxic Process, They're Doubling Down To Turn A Profit

Now a massive buildout and expansion of new and existing plastics and petrochemical infrastructure is coming to fracking’s rescue. One of the biggest petrochemical building booms is in the fracking regions of the Tri-State area of Ohio, Pennsylvania and West Virginia. The key proposed facility is the Appalachian Storage Hub (Storage Hub), which would include a large underground storage facility and a web of interconnected pipeline infrastructure to connect to regional petrochemical plants and plastics factories in the Tri-State area — potentially extending into eastern Kentucky, which sits atop the Rogersville shale gas reserve.

The gas and petrochemical industries want to convert the region into the epicenter for shale gas development and to create a new regional chemical manufacturing cluster to bolster their profits. The American Chemical Council (ACC) estimated that chemical industries and plastics industries could invest $35.8 billion in central Appalachia’s emerging petrochemical and plastics manufacturing facilities and large underground gas storage facility.The combination of shale gas production and petrochemical facilities would create what Crain’s Cleveland Business dubbed “an ethane tsunami."

The proposed storage complex may be a profit bonanza for industry, but it is a pollution pitfall for communities and ecosystems of the Appalachian basin. Converting the region into the second largest concentration of plastics and chemical manufacturing outside the highly polluted Gulf Coast will compound the Tri-State area’s already substantial exposure to industrial toxic emissions, while increasing plastic materials that largely end up polluting the earth’s oceans.

New petrochemical, plastic and interconnected gas infrastructure investments also prop up a faltering fracking industry. Building new pipelines that deliver fracked gas to plastics plants and to export terminals to be shipped to global manufacturers will drive up natural gas demand and price. This provides a profit incentive to justify the expansion of fracking extraction and the associated spills, accidents, water pollution, climate-destroying methane emissions and ecosystem damage.